Update: House Passes Sweepstakes Bill

The U.S. House approved H.R. 170, the Honesty in Sweepstakes Act, by voice vote this week. The bill, which is the House version of S. 335, the Deceptive Mail Prevention and Enforcement Act, is now being examined by the Senate.

As of press time, it wasn't clear whether the Senate will approve the House version and send it to President Clinton, who is expected to sign it, or if changes will be made, which would require the bill to go through a joint committee and then back through the House and Senate.

Insiders said the Senate may make minor changes, bypass the committee and send it back to the House for quick approval. Most agree that the bill could be signed by Clinton as early as Wednesday, when this session of Congress ends and before Clinton takes a two-week foreign trip.

"We want the House and Senate to settle their differences very quickly," said Jerry Cerasale, senior vice president of government relations at the Direct Marketing Association. "We don't care what the procedure is. We just want it done and sent to the president before the end of this session."

The DMA supports the legislation in H.R. 170 because it will provide government regulators with the necessary tools to shut down fraudulent operators and establish some promotions standards. H.R. 170, which will allow states to impose their own regulations, is less restrictive than the Senate bill, which was approved in August. Among its provisions, the House bill:

• Does not include the word "prominently" to describe where disclosures be placed on sweeps mailings.

• Requires sweepstakes marketers to remove the names of people who don't want to receive their offers within 60 days.

• Permits individuals to sue marketers for failing to remove their names from mailing lists in a timely fashion.

• Grants the U.S. Postal Service's administrative judges subpoena authority during the course of a relative hearing about deceptive mailings.

The DMA's Ethical Business Practice committee also delved into the sweepstakes issue as the DMA said this week that 19 of the 40 complaints brought before the committee this past quarter concerned sweepstakes and prize promotions.

At issue was the overall impression that recipients had won major prizes. The committee expressed concern over what appeared to be inconsistent disclosures and qualifying statements and contacted all of the companies involved, most of which agreed to make changes.

In the 14 cases involving collection and maintenance of marketing data, eight cases addressed noncompliance with the DMA's Privacy Promise, the first since it went into effect in July. One other case involved list usage. The committee has recommended to the DMA board of directors that the eight violators be sent certified letters saying they will be expelled from the DMA if they don't comply. The final seven cases involved general advertising and business practice issues.